Indonesian President Joko Widodo has approved a long-term plan for the government to abandon overcrowded, sinking and polluted Jakarta and build a new capital. The idea has been circulating for decades – since the time of Indonesia’s first President Sukarno – but it has never been decided or discussed in a planned and mature manner.

Options were discussed at a special cabinet meeting on April 29. The front runner seems to be Palangkaraya on the island of Borneo, while the second option was to establish a new capital located 50 to 70 kilometers outside Jakarta. Planning Minister Bambang Brodjonegoro, however, said eastern Indonesia was favoured.

While the location of the new capital has yet to be decided, the Jokowi administration aims to form a center of government similar to Washington, D.C. or Brasilia in a new city, leaving Jakarta as the business, trade and financial hub similar to New York in the US. A new capital would require an area of 30,000 to 40,000 hectares and have a population of between 900,000 and 1.5 million. Costs for a move would be up to $30 billion.

Bambang said the new capital would house all three branches of Indonesia’s government, namely the executive, legislative and judiciary, as well as the headquarters of the national police and the military, foreign embassies and international organizations. Meanwhile, financial sector institutions, such as Bank Indonesia, the Financial Services Authority and the Investment Coordinating Board, would remain in Jakarta.

However, Bambang said the relocation would not adequately address the overpopulation in Java, a home to 57 per cent of the roughly 260 million people of Indonesia, and they would not support the government’s aim to shift the nation from its Java-centric development to a more inclusive development agenda for the whole archipelago.

Prone to flooding and rapid sinking because of uncontrolled groundwater extraction, Jakarta with a population of about 30 million in its greater metropolitan area is the archetypical Asian mega-city creaking under the weight of its dysfunction. Only four per cent of Jakarta’s waste water is treated, according to the government, causing massive pollution to rivers and contaminating the groundwater that supplies the city. Congestion is estimated to cost the economy $6.5 billion a year.

Improving inadequate infrastructure in the country of 260 million has been Widodo’s signature policy and helped him win a second term in elections earlier this month.